Digital transformation has become imperative for modern businesses seeking to thrive in a rapidly evolving landscape. According to recent studies, around 70% of companies have implemented a digital transformation strategy or have a development plan in progress. This shift is fueled by various factors, including the increasing adoption of cloud computing, big data analytics, artificial intelligence (AI) and the internet of things (IoT). The COVID-19 pandemic accelerated the pace of digital transformation, with remote work now increasingly common and digital channels becoming primary avenues for customer engagement. Investments in digital transformation initiatives are expected to continue to rise, with forecasts indicating global spending to surpass trillions of dollars in the coming years.

Key Objectives and Drivers

The main drivers of digital transformation reside under two categories: External and internal. Externally, improving customer experiences is crucial. The essential questions to consider are, “Are the organization’s products and services adding value to clients?” and “What telemetry and analytics does the company have that provides value to customers?” Improving customer journeys begins with ensuring the product or service reduces friction for the customer and drives them to purchase more value-adds. Market trends, like generative AI (GenAI), digital security against ever-changing ransomware, and competitive pressure also drive digital needs.

Cutting-edge technology advances quickly, and disruption happens every quarter, making continuous research and planning key. Internal review of priorities varies based on individual companies and industries. These may include cost optimization from hardware and software to resources and manpower, margin improvement, AI automation and time to market. Additionally, government regulations and standards over internet processes provide a more structured way of collaborating across international organizations to reach common goals.

Emerging technologies like AI, IoT and blockchain converge to create value, and the context of the problem being solved is the layer that binds them together. For example, IoT connects disparate data and tracks it from edge locations to the cloud, but blockchain delivers the data securely. AI provides valuable, multi-dimensional insights from the data accurately and quickly, recognizing patterns that humans might miss. Business goals, objectives, and key drivers toward digital transformation are directly tied together through the Three Ps: Product, processes and people. Considering these synergistically, not in silos, starting from the outside and working toward inner operations is imperative.

Digital Transformation Impact

How easy is the product or service to use throughout the process, from the sales cycle to the customer purchase? Digital transformation excels at providing simplicity for the customer experience. For example, if a competitor’s website or sales cycle is faster or easier to navigate, the customer will go there instead. To improve internal operations, organizations can look for bottlenecks to be optimized, resource investment — what expenses are being incurred and if they result in a positive return on investment (ROI) — and internal communication. Modern businesses integrate programs that combine email with calendars and other collaborative features to simplify and expedite processes, giving a better flow of information. This enables staff to see the status from start to finish, not just within the bubble they are working, helping them see why what they are doing is important.

Over the past several years, two companies have stood out in their digital transformation, setting the path for others to follow. Audi Business Innovation has utilized real-time 3D configuration and visualization of their vehicles, along with 2D imagery, to create a digital showroom experience for customers. Audi teams also use its automotive visualization platform (AVP) globally to produce high-quality visuals that save time and money from travel. The Walt Disney Company has latched onto the idea of the metaverse, moving toward more interactive entertainment, having started with numerous virtual reality experiences, like the Galaxy’s Edge Star Wars-themed experience. They are also dipping into blockchain and NFTs, while their parks and resorts have been using digital wristbands and a virtual assistant to simplify and personalize visits.

Best Practices

By following five critical guidelines, organizations can effectively navigate the complexities of internal digital transformation while prioritizing the impact on their employees, customers and stakeholders.

  1. Top-down approach. Leadership is vital in successfully implementing digital transformation strategies, and when executives make their intentions known, it’s a signal to the market that something big is on the horizon. Staff buy-in depends on organization leaders clearly articulating short- and long-term goals and fostering a culture shift of constant innovation and inspiration.
  2. Business outcomes. It is essential to consider the impact digital transformation will have on business outcomes, including ROI, customer expectations and effective data analysis of future market trends.
  3. Internal culture shift. By compensating those willing to take on additional risks and challenges while still performing their jobs, the organizational culture can be changed to one focused on growth and innovation.
  4. Prioritization. Though prioritization is a complex science and varies by organization, the two most common and critical aspects are what value is being provided for the customer and what value the business receives.
  5. Recognition. Rewarding individuals for new ideas and letting people know they are free to take risks and fail fosters experimentation and innovation. Allocating time for staff to brainstorm and work on new projects in addition to their current jobs encourages participation.

Embracing digital transformation in a modern business landscape is no longer a luxury but a necessity for survival and growth. A successful transformation requires a strategic mindset, agility and a willingness to challenge the status quo, as well as a commitment to ongoing learning and improvement.

Whether implementing digital solutions to streamline operations, enhancing customer experiences, adding value to existing products, launching new products, adopting sustainable practices or piloting a culture shift of innovation to stay ahead of competitors, transformation is the cornerstone of success.